Investors who purchased Bored Ape Yacht Club NFTs at highly inflated prices during the 2021 NFT craze have filed a lawsuit against the Sotheby's auction house and other defendants, alleging deceptive practices. The Bored Ape co0llection, like most NFTs, have cratered in values in the years since the craze.
Lucas NolanInvestors who purchased Bored Ape Yacht Club NFTs at highly inflated prices during the 2021 NFT craze have filed a lawsuit against the Sotheby’s auction house and other defendants, alleging deceptive practices. The Bored Ape co0llection, like most NFTs, have cratered in values in the years since the craze.that Sotheby’s auction house has been named as a defendant in a lawsuit filed by investors who regret buying Bored Ape Yacht Club NFTs.
The lawsuit further claims that the boost to Bored Ape NFT prices provided by the auction “was rooted in deception.” It alleges that it wasn’t revealed at the time of the auction that the buyer was the now-disgraced crypto platform FTX. “Sotheby’s representations that the undisclosed buyer was a ‘traditional’ collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience,” the lawsuit stated.
In September 2021, Sotheby’s sold a lot of 101 Bored Ape NFTs for $24.4 million at its “Ape In!” auction, well above the pre-auction estimates of $12 million to $18 million. That’s an average price of over $241,000. However, Bored Ape NFTs now sell for a floor price of about $50,000 worth of ether cryptocurrency, according to CoinGecko data.
The amended lawsuit alleges that Bored Ape NFT developer Yuga Labs “colluded with fine arts broker, Defendant Sotheby’s, to run a deceptive auction.” After the sale, a Sotheby’s representative described the winning bidder during a Twitter Spaces event as a “traditional” collector, the lawsuit said. The lawsuit claims that it turned out the auction buyer was now-bankrupt crypto exchange FTX, whose founder Sam Bankman-Fried is in jail awaiting trial on criminal charges.
The lawsuit alleges that Yuga Labs and Sotheby’s violated the California Unfair Competition Law, the California Corporate Securities Law, the US Securities Exchange Act, and the California Corporations Code. The plaintiffs also claim that Sotheby’s Metaverse, an NFT trading platform opened after the auction, “operated as an unregistered broker of securities.”
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